Republic of the Philippines

Lyceum Northern Luzon

Urdaneta, Pangasinan

FORMS OF BUSINESS
Erma S. Jalin
When you form your new business, account for
the following:

- Your (practical) vision regarding the size and nature of your

business
- The level of control you wish to have
- The level of “structure” you are willing to deal with
- The business’s vulnerability to lawsuits
- Tax implications of the different organizational structures
- Expected profit (or loss) of the business
 A SOLE PROPRIETORHP IS A BUSINESS
OWNED AND OPERATED BY ONE
INDIVIDUAL.

IT IS THE MOST SIMPLE FORM OF BUSINESS AND

THE EASIEST TO REGISTER, THROUGH THE
BUREAU OF TRADE REGULATION AND CONSUMER
PROTECTION (BTCRP) OF THE DEPARTMENT OF
TRADE AND INDUSTRY (DTI)
 EASY TO START  EASYTO WINDUP

 NO PROFIT SHARING  NO CORPORATE TAXES

 EASY DECISION-MAKING
 UNLIMITED LIABILITY  LOSS IN ABSENCE

 RAISING FUNDS  EMPLOYEE BENEFITS (MEDICAL

INSURANCE PREMIUMS) NOT
DEDUCTIBLE (TAXES)
 LIMITED LIFE
 FOR BUSINESS WHERE CAPITAL REQUIRED IS SMALL
AND RISK INVOLVEMENT IS NOT HEAVY, THIS TYPE
OF FORM IS SUITABLE

IT IS ALSO CONSIDERED SUITABLE FOR THE

PRODUCTION OF GOODS WHICH INVOLVE MANUAL
SKILL
EXAMPLES:
HANDICRAFTS, TAILORING, HAIRCUTTING, ETC.
A PARTNERSHIP IS A LEGAL RELATIONSHIP FORMED
BY THE AGREEMENT BETWEEN TWO OR MORE
INDIVIDUALS TO CARRY ON A BUSINESS AS CO-
OWNERS.
 RELATIVELY EASY TO START  LOSS SHARING

 THE ABILITY TO RAISE

 NO LOSS IN ABSENCE
FUNDS

 MORE SKILLED PERSON

 UNLIMITED LIABILITY
 CONFLICTS

 PROFIT SHARING
 TRANSFERABILITY IS DIFFICULT

 LIMITED LIFE
SUCH FIRMS ARE MOST SUITABLE FOR COMPARATIVELY SMALL
BUSINESS SUCH AS:
 RETAIL AND WHOLESALE TRADE
 PROFESSIONAL SERVICES
 MEDUIM SIZED MERCANTILE HOUSES
 SMALL MANUFACTURING UNITS
 A CORPORATION, CHARTERED BY THE STATE IN
WHICH IT IS HEADQUARTERED, IS CONSIDERED BY
LAW TO BE A UNIQUE ENTITY, SEPARATE AND
APART FROM THOSE WHO OWN IT.

A CORPORATION CAN BE TAXED; IT CAN BE SUED; IT CAN

ENTER INTO CONTRACTUAL AGREEMENTS. THE OWNERS OF
A CORPORATION ARE ITS SHAREHOLDERS. THE
SHAREHOLDERS ELECT A BOARD OF DIRECTORS TO OVERSEE
THE MAJOR POLICIES AND DECISIONS. THE CORPORATION
HAS A LIFE OF ITS OWN AND DOES NOT DISSOLVE WHEN
OWNERSHIP CHANGES.
  CONTINUITY OF
 LIMITED LIABILITY
EXISTENCE

 TRANSFER OF OWNERSHIP  BENEFITS OF LARGE

 SOCIAL BENEFIT
BY SALE OF STOCK SCALE OPERATION

 EASIER TO RAISE CAPITAL

 PROFESSIONAL
THROUGH SHARES AND
MANAGEMENT
BONDS
 FORMATION IS NOT EASY  EXCESSIVE GOVERNMENT
CONTROL

 CONTROL BY A GROUP
 DELAY IN POLICY DECISIONS.

 MANY LEGAL FORMALITIES

END OF PRESENTATION